LOS ANGELES (CNS) - Los Angeles Controller Ron Galperin said today that the city's pandemic-related financial problems will likely get worse before they get better.
The city's revenues decreased by 4% between July 1, 2019, and June 30 due to the COVID-19 pandemic, while in the previous fiscal year, revenues increased by 13.7%, according to the Fiscal Year 2020 annual financial report the controller released Thursday.
The 2020 loss equates to $17.5 billion, attributed to the pandemic's impact on trade, tourism and tax revenues, according to Galperin's report.
“The last fiscal year was truly unprecedented. The first three quarters were powered by solid revenue growth and, in the final quarter, the economy took a nosedive when the pandemic reached California,'' he said. “More than 10 months later, we are just starting to reopen, but we know that cannot happen as quickly as Angelenos want or need.
“It's almost certain that the city's financial woes will get worse before they get better. We can get through this, but it is going to take hard work, creativity and sacrifice to overcome these challenges.''
While revenues decreased, the city's General Fund, which is its main operating fund, grew 1.9% in 2020, which Galperin's office characterized as “moderate.''
For the first six months of the 2021 fiscal year, however, General Fund revenues were down 10.8% or $254 million.
Los Angeles' expenses rose by about 10% to $16.5 billion during the 2020 fiscal year, and General Fund expenses rose by 7.3%.
According to the report, the cost of salaries and benefits rose by $253 million, and retirement contributions rose by $88 million.
Expenses have continued to increase in the first six months of the 2021 fiscal year, with General Fund expenses up by 1.4%, or $43 million.
Some of the expenses, largely COVID-19 response activities, are eligible for reimbursement, according to the report, which included suggestions for the city to stabilize its finances, including:
-- pursuing federal and state funding to protect core services and assist in COVID-19 relief efforts;
-- repurposing special funds, such as ones used to maintain parks and pick up trash, to alleviate pandemic pain;
-- working to collect revenue from other streams, while tourism-related revenue has dropped, and try to defer expenses where possible; and -- rebuilding the Reserve Fund after the city transferred about $200 million from it to the General Fund.
The entire report is available at https://lacontroller.org/financial-reports/cafr2020/
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